Honda (7267): Good FY17 Q1 Results – More Room for Earnings Upgrades
Honda released Q1 earnings, with net sales +7% YoY to ¥3,713bil; OP +0.9% YoY to ¥269.2bil and NP +18.7% YoY to ¥207.3bil. The results were above consensus OP of ¥231bil. Honda upgraded its sales and profits forecasts, adjusting for the currency in Q1 (¥111/US$ versus previously expected ¥105/US$). However, in our view, the new estimates still look conservative, with FY17CE OP of ¥725bil (-13.8% YoY), as they are still based on forex assumptions of ¥105/US$ for the remainder of the year. Moreover, they do not seem to take into account higher volume / mix contributions in FY17 H2, which we expect to see.
Key Points
- Autos not as bad as it looks
- Motorcycles not as good as it looks
- North Amercia OP should improve in FY17 H2
- Currency impact remains a negative
- Production cost savings are a positive
- Futher potential for earnings upside in Q2 and H2
Honda Motor is the parent company of a group mainly develop, manufacture and distribute motorcycles, automobiles, power products, and also provide financing for the sale of those products. Principal manufacturing facilities are located in Japan, the United States of America, Canada, Mexico, the United Kingdom, Turkey, China, India, Indonesia, Malaysia, Thailand, Vietnam, Argentina, and Brazil. Co.'s principal business segments are motorcycles, automobiles, financial services, and power products & other business. Co.'s principal automobile products include passenger cars such as "Legend," "Accord," "Inspire," "Civic," "Insight," "City," "Acura RL," "Acura TL," "Acura TSX," and "Acura CSX".
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries.
The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012.
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